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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Lowes Companies Inc | NYSE:LOW | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
3.42 | 1.49% | 233.00 | 238.15 | 231.98 | 233.58 | 1,834,731 | 00:03:33 |
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
North Carolina
|
|
56-0578072
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
1000 Lowe’s Blvd., Mooresville, NC
|
|
28117
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
|
|
Registrant’s telephone number, including area code
|
|
(704) 758-1000
|
Large accelerated filer
ý
|
|
Accelerated filer
o
|
Non-accelerated filer
o
|
|
Smaller reporting company
o
|
CLASS
|
|
OUTSTANDING AT 8/26/2016
|
Common Stock, $0.50 par value
|
|
874,659,454
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|||||||
|
|
|
July 29, 2016
|
|
July 31, 2015
|
|
January 29, 2016
|
|||||||
Assets
|
|
|
|
|
|
|
|
|||||||
Current assets:
|
|
|
|
|
|
|
|
|||||||
Cash and cash equivalents
|
|
|
$
|
1,988
|
|
|
$
|
901
|
|
|
$
|
405
|
|
|
Short-term investments
|
|
|
168
|
|
|
188
|
|
|
307
|
|
||||
Merchandise inventory - net
|
|
|
10,604
|
|
|
9,704
|
|
|
9,458
|
|
||||
Other current assets
|
|
|
591
|
|
|
322
|
|
|
391
|
|
||||
Total current assets
|
|
|
13,351
|
|
|
11,115
|
|
|
10,561
|
|
||||
Property, less accumulated depreciation
|
|
|
20,274
|
|
|
19,751
|
|
|
19,577
|
|
||||
Long-term investments
|
|
|
604
|
|
|
412
|
|
|
222
|
|
||||
Deferred income taxes - net
|
|
|
250
|
|
|
254
|
|
|
241
|
|
||||
Goodwill
|
|
|
1,074
|
|
|
154
|
|
|
154
|
|
||||
Other assets
|
|
|
918
|
|
|
1,050
|
|
|
511
|
|
||||
Total assets
|
|
|
$
|
36,471
|
|
|
$
|
32,736
|
|
|
$
|
31,266
|
|
|
|
|
|
|
|
|
|
|
|||||||
Liabilities and equity
|
|
|
|
|
|
|
|
|||||||
Current liabilities:
|
|
|
|
|
|
|
|
|||||||
Short-term borrowings
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
43
|
|
|
Current maturities of long-term debt
|
|
|
1,193
|
|
|
1,014
|
|
|
1,061
|
|
||||
Accounts payable
|
|
|
7,696
|
|
|
7,123
|
|
|
5,633
|
|
||||
Accrued compensation and employee benefits
|
|
|
750
|
|
|
667
|
|
|
820
|
|
||||
Deferred revenue
|
|
|
1,285
|
|
|
1,146
|
|
|
1,078
|
|
||||
Other current liabilities
|
|
|
2,259
|
|
|
2,191
|
|
|
1,857
|
|
||||
Total current liabilities
|
|
|
13,183
|
|
|
12,141
|
|
|
10,492
|
|
||||
Long-term debt, excluding current maturities
|
|
|
14,618
|
|
|
10,336
|
|
|
11,545
|
|
||||
Deferred revenue - extended protection plans
|
|
|
744
|
|
|
739
|
|
|
729
|
|
||||
Other liabilities
|
|
|
904
|
|
|
833
|
|
|
846
|
|
||||
Total liabilities
|
|
|
29,449
|
|
|
24,049
|
|
|
23,612
|
|
||||
|
|
|
|
|
|
|
|
|||||||
Equity:
|
|
|
|
|
|
|
|
|||||||
Preferred stock - $5 par value, none issued
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Common stock - $0.50 par value;
|
|
|
|
|
|
|
|
|||||||
Shares issued and outstanding
|
|
|
|
|
|
|
|
|||||||
July 29, 2016
|
881
|
|
|
|
|
|
|
|
||||||
July 31, 2015
|
928
|
|
|
|
|
|
|
|
||||||
January 29, 2016
|
910
|
|
|
440
|
|
|
464
|
|
|
455
|
|
|||
Capital in excess of par value
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Retained earnings
|
|
|
6,839
|
|
|
8,533
|
|
|
7,593
|
|
||||
Accumulated other comprehensive loss
|
|
|
(366
|
)
|
|
(310
|
)
|
|
(394
|
)
|
||||
Total Lowe’s Companies, Inc. shareholders’ equity
|
|
|
6,913
|
|
|
8,687
|
|
|
7,654
|
|
||||
Noncontrolling interest
|
|
|
109
|
|
|
—
|
|
|
—
|
|
||||
Total equity
|
|
|
7,022
|
|
|
8,687
|
|
|
7,654
|
|
||||
Total liabilities and equity
|
|
|
$
|
36,471
|
|
|
$
|
32,736
|
|
|
$
|
31,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
July 29, 2016
|
|
July 31, 2015
|
|
July 29, 2016
|
|
July 31, 2015
|
||||||||||||||||
Current Earnings
|
Amount
|
|
% Sales
|
|
Amount
|
|
% Sales
|
|
Amount
|
|
% Sales
|
|
Amount
|
|
% Sales
|
||||||||
Net sales
|
$
|
18,260
|
|
|
100.00
|
|
$
|
17,348
|
|
|
100.00
|
|
$
|
33,494
|
|
|
100.00
|
|
$
|
31,478
|
|
|
100.00
|
Cost of sales
|
11,972
|
|
|
65.56
|
|
11,367
|
|
|
65.53
|
|
21,868
|
|
|
65.29
|
|
20,486
|
|
|
65.08
|
||||
Gross margin
|
6,288
|
|
|
34.44
|
|
5,981
|
|
|
34.47
|
|
11,626
|
|
|
34.71
|
|
10,992
|
|
|
34.92
|
||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Selling, general and administrative
|
3,871
|
|
|
21.20
|
|
3,634
|
|
|
20.94
|
|
7,265
|
|
|
21.69
|
|
7,047
|
|
|
22.39
|
||||
Depreciation
|
366
|
|
|
2.00
|
|
375
|
|
|
2.16
|
|
723
|
|
|
2.16
|
|
741
|
|
|
2.35
|
||||
Interest - net
|
166
|
|
|
0.91
|
|
133
|
|
|
0.77
|
|
323
|
|
|
0.96
|
|
267
|
|
|
0.85
|
||||
Total expenses
|
4,403
|
|
|
24.11
|
|
4,142
|
|
|
23.87
|
|
8,311
|
|
|
24.81
|
|
8,055
|
|
|
25.59
|
||||
Pre-tax earnings
|
1,885
|
|
|
10.33
|
|
1,839
|
|
|
10.60
|
|
3,315
|
|
|
9.90
|
|
2,937
|
|
|
9.33
|
||||
Income tax provision
|
718
|
|
|
3.94
|
|
713
|
|
|
4.11
|
|
1,264
|
|
|
3.78
|
|
1,138
|
|
|
3.62
|
||||
Net earnings
|
$
|
1,167
|
|
|
6.39
|
|
$
|
1,126
|
|
|
6.49
|
|
$
|
2,051
|
|
|
6.12
|
|
$
|
1,799
|
|
|
5.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding - basic
|
883
|
|
|
|
|
931
|
|
|
|
|
890
|
|
|
|
|
940
|
|
|
|
||||
Basic earnings per common share
|
$
|
1.32
|
|
|
|
|
$
|
1.20
|
|
|
|
|
$
|
2.29
|
|
|
|
|
$
|
1.90
|
|
|
|
Weighted average common shares outstanding - diluted
|
885
|
|
|
|
|
933
|
|
|
|
|
892
|
|
|
|
|
942
|
|
|
|
||||
Diluted earnings per common share
|
$
|
1.31
|
|
|
|
|
$
|
1.20
|
|
|
|
|
$
|
2.29
|
|
|
|
|
$
|
1.90
|
|
|
|
Cash dividends per share
|
$
|
0.35
|
|
|
|
|
$
|
0.28
|
|
|
|
|
$
|
0.63
|
|
|
|
|
$
|
0.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Retained Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
$
|
7,074
|
|
|
|
|
$
|
9,085
|
|
|
|
|
$
|
7,593
|
|
|
|
|
$
|
9,591
|
|
|
|
Net earnings
|
1,167
|
|
|
|
|
1,126
|
|
|
|
|
2,051
|
|
|
|
|
1,799
|
|
|
|
||||
Cash dividends
|
(309
|
)
|
|
|
|
(260
|
)
|
|
|
|
(560
|
)
|
|
|
|
(478
|
)
|
|
|
||||
Share repurchases
|
(1,093
|
)
|
|
|
|
(1,418
|
)
|
|
|
|
(2,245
|
)
|
|
|
|
(2,379
|
)
|
|
|
||||
Balance at end of period
|
$
|
6,839
|
|
|
|
|
$
|
8,533
|
|
|
|
|
$
|
6,839
|
|
|
|
|
$
|
8,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||||||||||||||||
|
July 29, 2016
|
|
July 31, 2015
|
|
July 29, 2016
|
|
July 31, 2015
|
|||||||||||||||||||
|
Amount
|
|
% Sales
|
|
Amount
|
|
% Sales
|
|
Amount
|
|
% Sales
|
|
Amount
|
|
% Sales
|
|||||||||||
Net earnings
|
$
|
1,167
|
|
|
6.39
|
|
|
$
|
1,126
|
|
|
6.49
|
|
|
$
|
2,051
|
|
|
6.12
|
|
$
|
1,799
|
|
|
5.71
|
|
Foreign currency translation adjustments - net of tax
|
(56
|
)
|
|
(0.30
|
)
|
|
(229
|
)
|
|
(1.32
|
)
|
|
27
|
|
|
0.09
|
|
(207
|
)
|
|
(0.66
|
)
|
||||
Other comprehensive income/(loss)
|
(56
|
)
|
|
(0.30
|
)
|
|
(229
|
)
|
|
(1.32
|
)
|
|
27
|
|
|
0.09
|
|
(207
|
)
|
|
(0.66
|
)
|
||||
Comprehensive income
|
$
|
1,111
|
|
|
6.09
|
|
|
$
|
897
|
|
|
5.17
|
|
|
$
|
2,078
|
|
|
6.21
|
|
$
|
1,592
|
|
|
5.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
||||||
|
July 29, 2016
|
|
July 31, 2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net earnings
|
$
|
2,051
|
|
|
$
|
1,799
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
778
|
|
|
791
|
|
||
Deferred income taxes
|
(25
|
)
|
|
(102
|
)
|
||
(Gain)/Loss on property and other assets - net
|
(51
|
)
|
|
17
|
|
||
Loss on equity method investments
|
5
|
|
|
31
|
|
||
Share-based payment expense
|
49
|
|
|
57
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Merchandise inventory - net
|
(310
|
)
|
|
(804
|
)
|
||
Other operating assets
|
84
|
|
|
27
|
|
||
Accounts payable
|
1,723
|
|
|
2,005
|
|
||
Other operating liabilities
|
324
|
|
|
343
|
|
||
Net cash provided by operating activities
|
4,628
|
|
|
4,164
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of investments
|
(675
|
)
|
|
(488
|
)
|
||
Proceeds from sale/maturity of investments
|
431
|
|
|
366
|
|
||
Capital expenditures
|
(490
|
)
|
|
(570
|
)
|
||
Contributions to equity method investments - net
|
—
|
|
|
(39
|
)
|
||
Proceeds from sale of property and other long-term assets
|
17
|
|
|
20
|
|
||
Purchases of derivative instruments
|
(103
|
)
|
|
—
|
|
||
Proceeds from settlement of derivative instruments
|
179
|
|
|
—
|
|
||
Acquisition of business - net
|
(2,284
|
)
|
|
—
|
|
||
Other - net
|
(9
|
)
|
|
(25
|
)
|
||
Net cash used in investing activities
|
(2,934
|
)
|
|
(736
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Net change in short-term borrowings
|
(44
|
)
|
|
—
|
|
||
Net proceeds from issuance of long-term debt
|
3,267
|
|
|
—
|
|
||
Repayment of long-term debt
|
(495
|
)
|
|
(31
|
)
|
||
Proceeds from issuance of common stock under share-based payment plans
|
82
|
|
|
62
|
|
||
Cash dividend payments
|
(506
|
)
|
|
(440
|
)
|
||
Repurchase of common stock
|
(2,454
|
)
|
|
(2,629
|
)
|
||
Other - net
|
40
|
|
|
50
|
|
||
Net cash used in financing activities
|
(110
|
)
|
|
(2,988
|
)
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash
|
(1
|
)
|
|
(5
|
)
|
||
|
|
|
|
||||
Net increase in cash and cash equivalents
|
1,583
|
|
|
435
|
|
||
Cash and cash equivalents, beginning of period
|
405
|
|
|
466
|
|
||
Cash and cash equivalents, end of period
|
$
|
1,988
|
|
|
$
|
901
|
|
|
|
|
|
(In millions)
|
May 20, 2016
|
||
Purchase price:
|
|
||
Cash paid
|
$
|
2,367
|
|
|
|
||
Allocation:
|
|
||
Cash acquired
|
83
|
|
|
Accounts receivable
|
260
|
|
|
Merchandise inventory
|
817
|
|
|
Property
|
923
|
|
|
Amortizable intangible assets:
|
|
||
Trademarks
|
203
|
|
|
Dealer relationships
|
106
|
|
|
Other assets
|
142
|
|
|
Goodwill
|
922
|
|
|
Current liabilities assumed
|
(615
|
)
|
|
Long-term liabilities assumed
|
(365
|
)
|
|
Noncontrolling interest
|
(109
|
)
|
|
Total net assets acquired
|
$
|
2,367
|
|
•
|
Level 1
-
inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities
|
•
|
Level 2
-
inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly
|
•
|
Level 3
-
inputs to the valuation techniques that are unobservable for the assets or liabilities
|
|
|
|
Fair Value Measurements at
|
||||||||||
(In millions)
|
Measurement Level
|
|
July 29, 2016
|
|
July 31, 2015
|
|
January 29, 2016
|
||||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
||||||
Certificates of deposit
|
Level 1
|
|
$
|
95
|
|
|
$
|
116
|
|
|
$
|
56
|
|
Municipal obligations
|
Level 2
|
|
42
|
|
|
12
|
|
|
38
|
|
|||
Money market funds
|
Level 1
|
|
25
|
|
|
57
|
|
|
192
|
|
|||
Municipal floating rate obligations
|
Level 2
|
|
6
|
|
|
3
|
|
|
21
|
|
|||
Total short-term investments
|
|
|
$
|
168
|
|
|
$
|
188
|
|
|
$
|
307
|
|
Long-term investments:
|
|
|
|
|
|
|
|
||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
||||||
Municipal floating rate obligations
|
Level 2
|
|
$
|
598
|
|
|
$
|
402
|
|
|
$
|
212
|
|
Municipal obligations
|
Level 2
|
|
4
|
|
|
5
|
|
|
5
|
|
|||
Certificates of deposit
|
Level 1
|
|
2
|
|
|
5
|
|
|
5
|
|
|||
Total long-term investments
|
|
|
$
|
604
|
|
|
$
|
412
|
|
|
$
|
222
|
|
|
July 29, 2016
|
|
July 31, 2015
|
|
January 29, 2016
|
||||||||||||||||||
(In millions)
|
Carrying Amount
|
|
|
Fair Value
|
|
|
Carrying Amount
1
|
|
|
Fair Value
|
|
|
Carrying Amount
|
|
|
Fair Value
|
|
||||||
Unsecured notes (Level 1)
|
$
|
14,956
|
|
|
$
|
17,284
|
|
|
$
|
10,854
|
|
|
$
|
12,017
|
|
|
$
|
12,073
|
|
|
$
|
13,292
|
|
Mortgage notes (Level 2)
|
10
|
|
|
11
|
|
|
7
|
|
|
8
|
|
|
7
|
|
|
8
|
|
||||||
Long-term debt (excluding capitalized lease obligations)
|
$
|
14,966
|
|
|
$
|
17,295
|
|
|
$
|
10,861
|
|
|
$
|
12,025
|
|
|
$
|
12,080
|
|
|
$
|
13,300
|
|
1
|
Carrying amounts as of
July 31, 2015
have been retrospectively adjusted as a result of the Company’s adoption of ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, during the fourth quarter of fiscal 2015. The adoption of this accounting standard required reclassification of debt issuance costs from other assets to long-term debt, excluding current maturities.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions)
|
July 29, 2016
|
|
July 31, 2015
|
|
July 29, 2016
|
|
July 31, 2015
|
||||||||
Deferred revenue - extended protection plans, beginning of period
|
$
|
726
|
|
|
$
|
727
|
|
|
$
|
729
|
|
|
$
|
730
|
|
Additions to deferred revenue
|
106
|
|
|
100
|
|
|
192
|
|
|
182
|
|
||||
Deferred revenue recognized
|
(88
|
)
|
|
(88
|
)
|
|
(177
|
)
|
|
(173
|
)
|
||||
Deferred revenue - extended protection plans, end of period
|
$
|
744
|
|
|
$
|
739
|
|
|
$
|
744
|
|
|
$
|
739
|
|
|
Three Months Ended
|
||||||||||||
|
July 29, 2016
|
|
July 31, 2015
|
||||||||||
(In millions)
|
Shares
|
|
|
Cost
1
|
|
|
Shares
|
|
|
Cost
1
|
|
||
Share repurchase program
|
14.8
|
|
|
$
|
1,200
|
|
|
19.4
|
|
|
$
|
1,500
|
|
Shares withheld from employees
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||
Total share repurchases
|
14.8
|
|
|
$
|
1,201
|
|
|
19.4
|
|
|
$
|
1,500
|
|
1
|
Reductions of
$1.1 billion
and
$1.4 billion
were recorded to retained earnings, after capital in excess of par value was depleted, for the three months ended
July 29, 2016
and
July 31, 2015
, respectively.
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2016
|
|
July 31, 2015
|
||||||||||
(In millions)
|
Shares
|
|
|
Cost
2
|
|
|
Shares
|
|
|
Cost
2
|
|
||
Share repurchase program
|
30.7
|
|
|
$
|
2,399
|
|
|
33.0
|
|
|
$
|
2,500
|
|
Shares withheld from employees
|
0.7
|
|
|
53
|
|
|
0.8
|
|
|
63
|
|
||
Total share repurchases
|
31.4
|
|
|
$
|
2,452
|
|
|
33.8
|
|
|
$
|
2,563
|
|
2
|
Reductions of
$2.2 billion
and
$2.4 billion
were recorded to retained earnings, after capital in excess of par value was depleted, for the
six
months ended
July 29, 2016
and
July 31, 2015
, respectively.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions, except per share data)
|
July 29, 2016
|
|
July 31, 2015
|
|
July 29, 2016
|
|
July 31, 2015
|
||||||||
Basic earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Net earnings
|
$
|
1,167
|
|
|
$
|
1,126
|
|
|
$
|
2,051
|
|
|
$
|
1,799
|
|
Less: Net earnings allocable to participating securities
|
(5
|
)
|
|
(5
|
)
|
|
(8
|
)
|
|
(9
|
)
|
||||
Net earnings allocable to common shares, basic
|
$
|
1,162
|
|
|
$
|
1,121
|
|
|
$
|
2,043
|
|
|
$
|
1,790
|
|
Weighted-average common shares outstanding
|
883
|
|
|
931
|
|
|
890
|
|
|
940
|
|
||||
Basic earnings per common share
|
$
|
1.32
|
|
|
$
|
1.20
|
|
|
$
|
2.29
|
|
|
$
|
1.90
|
|
Diluted earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Net earnings
|
$
|
1,167
|
|
|
$
|
1,126
|
|
|
$
|
2,051
|
|
|
$
|
1,799
|
|
Less: Net earnings allocable to participating securities
|
(5
|
)
|
|
(5
|
)
|
|
(8
|
)
|
|
(9
|
)
|
||||
Net earnings allocable to common shares, diluted
|
$
|
1,162
|
|
|
$
|
1,121
|
|
|
$
|
2,043
|
|
|
$
|
1,790
|
|
Weighted-average common shares outstanding
|
883
|
|
|
931
|
|
|
890
|
|
|
940
|
|
||||
Dilutive effect of non-participating share-based awards
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
||||
Weighted-average common shares, as adjusted
|
885
|
|
|
933
|
|
|
892
|
|
|
942
|
|
||||
Diluted earnings per common share
|
$
|
1.31
|
|
|
$
|
1.20
|
|
|
$
|
2.29
|
|
|
$
|
1.90
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions)
|
July 29, 2016
|
|
July 31, 2015
|
|
July 29, 2016
|
|
July 31, 2015
|
||||||||
Long-term debt
|
$
|
152
|
|
|
$
|
122
|
|
|
$
|
286
|
|
|
$
|
245
|
|
Capitalized lease obligations
|
15
|
|
|
11
|
|
|
27
|
|
|
21
|
|
||||
Interest income
|
(4
|
)
|
|
(2
|
)
|
|
(6
|
)
|
|
(2
|
)
|
||||
Interest capitalized
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
||||
Interest on tax uncertainties
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Other
|
4
|
|
|
2
|
|
|
16
|
|
|
4
|
|
||||
Interest - net
|
$
|
166
|
|
|
$
|
133
|
|
|
$
|
323
|
|
|
$
|
267
|
|
|
Six Months Ended
|
||||||
(In millions)
|
July 29, 2016
|
|
July 31, 2015
|
||||
Cash paid for interest, net of amount capitalized
|
$
|
298
|
|
|
$
|
266
|
|
Cash paid for income taxes - net
|
$
|
1,028
|
|
|
$
|
1,068
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Non-cash property acquisitions, including assets acquired under capital lease
|
$
|
47
|
|
|
$
|
51
|
|
Cash dividends declared but not paid
|
$
|
309
|
|
|
$
|
260
|
|
•
|
Executive Overview
|
•
|
Operations
|
•
|
Lowe’s Business Outlook
|
•
|
Financial Condition, Liquidity and Capital Resources
|
•
|
Off-Balance Sheet Arrangements
|
•
|
Contractual Obligations and Commercial Commitments
|
•
|
Critical Accounting Policies and Estimates
|
|
Three Months Ended
|
|
Basis Point Increase / (Decrease) in Percentage of Net Sales from Prior Period
|
|
|
Percentage Increase / (Decrease) in Dollar Amounts from Prior Period
|
|
||||
|
July 29, 2016
|
|
July 31, 2015
|
|
2016 vs. 2015
|
|
|
2016 vs. 2015
|
|
||
Net sales
|
100.00
|
%
|
|
100.00
|
%
|
|
N/A
|
|
|
5.3
|
%
|
Gross margin
|
34.44
|
|
|
34.47
|
|
|
(3
|
)
|
|
5.1
|
%
|
Expenses:
|
|
|
|
|
|
|
|
||||
Selling, general and administrative
|
21.20
|
|
|
20.94
|
|
|
26
|
|
|
6.5
|
%
|
Depreciation
|
2.00
|
|
|
2.16
|
|
|
(16
|
)
|
|
(2.4
|
)%
|
Interest - net
|
0.91
|
|
|
0.77
|
|
|
14
|
|
|
25.0
|
%
|
Total expenses
|
24.11
|
|
|
23.87
|
|
|
24
|
|
|
6.3
|
%
|
Pre-tax earnings
|
10.33
|
|
|
10.60
|
|
|
(27
|
)
|
|
2.5
|
%
|
Income tax provision
|
3.94
|
|
|
4.11
|
|
|
(17
|
)
|
|
0.7
|
%
|
Net earnings
|
6.39
|
%
|
|
6.49
|
%
|
|
(10
|
)
|
|
3.7
|
%
|
EBIT margin
1
|
11.24
|
%
|
|
11.37
|
%
|
|
(13
|
)
|
|
4.0
|
%
|
1
|
EBIT margin, also referred to as operating margin, is defined as earnings before interest and taxes (EBIT) as a percentage of sales. EBIT is a non-GAAP financial measure. See below for additional information and reconciliation to the most comparable GAAP measure.
|
|
Six Months Ended
|
|
Basis Point Increase / (Decrease) in Percentage of Net Sales from Prior Period
|
|
|
Percentage Increase / (Decrease) in Dollar Amounts from Prior Period
|
|
||||
|
July 29, 2016
|
|
July 31, 2015
|
|
2016 vs. 2015
|
|
|
2016 vs. 2015
|
|
||
Net sales
|
100.00
|
%
|
|
100.00
|
%
|
|
N/A
|
|
|
6.4
|
%
|
Gross margin
|
34.71
|
|
|
34.92
|
|
|
(21
|
)
|
|
5.8
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||
Selling, general and administrative
|
21.69
|
|
|
22.39
|
|
|
(70
|
)
|
|
3.1
|
%
|
Depreciation
|
2.16
|
|
|
2.35
|
|
|
(19
|
)
|
|
(2.3
|
)%
|
Interest - net
|
0.96
|
|
|
0.85
|
|
|
11
|
|
|
20.9
|
%
|
Total expenses
|
24.81
|
|
|
25.59
|
|
|
(78
|
)
|
|
3.2
|
%
|
Pre-tax earnings
|
9.90
|
|
|
9.33
|
|
|
57
|
|
|
12.9
|
%
|
Income tax provision
|
3.78
|
|
|
3.62
|
|
|
16
|
|
|
11.1
|
%
|
Net earnings
|
6.12
|
%
|
|
5.71
|
%
|
|
41
|
|
|
14.0
|
%
|
EBIT margin
1
|
10.86
|
%
|
|
10.18
|
%
|
|
68
|
|
|
13.6
|
%
|
1
|
EBIT margin, also referred to as operating margin, is defined as earnings before interest and taxes (EBIT) as a percentage of sales. EBIT is a non-GAAP financial measure. See below for additional information and reconciliation to the most comparable GAAP measure.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Other Metrics
|
July 29, 2016
|
|
July 31, 2015
|
|
July 29, 2016
|
|
July 31, 2015
|
||||||||
Comparable sales increase
1
|
2.0
|
%
|
|
4.3
|
%
|
|
4.4
|
%
|
|
4.7
|
%
|
||||
Total customer transactions (in millions)
|
265
|
|
|
256
|
|
|
489
|
|
|
468
|
|
||||
Average ticket
2
|
$
|
68.91
|
|
|
$
|
67.23
|
|
|
$
|
68.53
|
|
|
$
|
66.97
|
|
At end of period:
|
|
|
|
|
|
|
|
||||||||
Number of stores
3
|
2,108
|
|
|
1,846
|
|
|
|
|
|
||||||
Sales floor square feet (in millions)
|
212
|
|
|
201
|
|
|
|
|
|
||||||
Average store size selling square feet (in thousands)
4
|
101
|
|
|
109
|
|
|
|
|
|
||||||
Return on invested capital
5
|
15.0
|
%
|
|
15.0
|
%
|
|
|
|
|
1
|
A comparable location is defined as a location that has been open longer than 13 months.
A location that is identified for relocation is no longer considered comparable one month prior to its relocation.
The relocated location must then remain open longer than 13 months to be considered comparable.
A location we have decided to close is no longer considered comparable as of the beginning of the month in which we announce its closing. Acquired locations are included in the comparable sales calculation beginning in the first full month following the first anniversary of the date of the acquisition. Comparable sales include online sales, which did not have a meaningful impact for the periods presented.
|
2
|
Average ticket is defined as net sales divided by the total number of customer transactions.
|
3
|
The number of stores as of July 29, 2016 includes 242 stores from the acquisition of RONA on May 20, 2016.
|
4
|
Average store size selling square feet is defined as sales floor square feet divided by the number of stores open at the end of the period. The average Lowe’s home improvement store has approximately 112,000 square feet of retail selling space.
|
5
|
Return on invested capital is a non-GAAP financial measure.
See below for additional information and a reconciliation to the most comparable GAAP measure.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions)
|
July 29, 2016
|
|
July 31, 2015
|
|
July 29, 2016
|
|
July 31, 2015
|
||||||||
Net earnings
|
$
|
1,167
|
|
|
$
|
1,126
|
|
|
$
|
2,051
|
|
|
$
|
1,799
|
|
Interest - net
|
166
|
|
|
133
|
|
|
323
|
|
|
267
|
|
||||
Income tax provision
|
718
|
|
|
713
|
|
|
1,264
|
|
|
1,138
|
|
||||
EBIT
|
$
|
2,051
|
|
|
$
|
1,972
|
|
|
$
|
3,638
|
|
|
$
|
3,204
|
|
(In millions, except percentage data)
|
For the Periods Ended
|
||||||
Calculation of Return on Invested Capital
|
July 29, 2016
|
|
July 31, 2015
|
||||
Numerator
1
|
|
|
|
||||
Net earnings
|
$
|
2,799
|
|
|
$
|
2,834
|
|
Plus:
|
|
|
|
||||
Interest expense - net
|
608
|
|
|
533
|
|
||
Provision for income taxes
|
1,998
|
|
|
1,743
|
|
||
Earnings before interest and taxes
|
5,405
|
|
|
5,110
|
|
||
Less:
|
|
|
|
||||
Income tax adjustment
2
|
2,203
|
|
|
1,944
|
|
||
Net operating profit after tax
|
$
|
3,202
|
|
|
$
|
3,166
|
|
Effective tax rate
|
41.7
|
%
|
|
38.1
|
%
|
||
Denominator
|
|
|
|
||||
Average debt and equity
3, 4
|
$
|
21,352
|
|
|
$
|
21,123
|
|
Return on invested capital
5
|
15.0
|
%
|
|
15.0
|
%
|
||
|
|
|
|
||||
Calculation of Return on Average Debt and Equity
|
|
|
|||||
Numerator
1
|
|
|
|
||||
Net earnings
|
$
|
2,799
|
|
|
$
|
2,834
|
|
Denominator
|
|
|
|
||||
Average debt and equity
3, 4
|
$
|
21,352
|
|
|
$
|
21,123
|
|
Return on average debt and equity
|
13.1
|
%
|
|
13.4
|
%
|
3
|
Average debt and equity is defined as average debt, including current maturities and short-term borrowings, plus total equity for the last five quarters.
|
4
|
Average debt and equity for the period ended
July 31, 2015
has been retrospectively adjusted as a result of the Company’s adoption of ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, during the fourth quarter of 2015. The adoption of this accounting standard required reclassification of debt issuance costs from other assets to long-term debt, excluding current maturities.
|
5
|
ROIC for the period ended
July 29, 2016
was negatively impacted by approximately 194 basis points due to the non-cash impairment charge on the Australian joint venture with Woolworths recognized in the fourth quarter of fiscal 2015, net of the foreign currency hedge gain recognized during 2016.
|
1
|
Operating margin growth excludes the impact of the prior year non-cash impairment charge on our Australian joint venture, which negatively impacted operating margin by approximately 90 basis points in fiscal year 2015. In addition, the current year impact of the net gain on the foreign currency option contract is excluded, which positively impacted operating margin by approximately 23 basis points.
|
|
Six Months Ended
|
||||
(In millions)
|
July 29, 2016
|
|
July 31, 2015
|
||
Net cash provided by (used in):
|
|
|
|
||
Operating activities
|
4,628
|
|
|
4,164
|
|
Investing activities
|
(2,934
|
)
|
|
(736
|
)
|
Financing activities
|
(110
|
)
|
|
(2,988
|
)
|
|
Payments Due by Period
|
||||||||||||||||||
(In millions)
|
Total
|
|
|
Less Than 1 Year
|
|
|
1-3 Years
|
|
|
4-5 Years
|
|
|
After 5 Years
|
|
|||||
Long-term debt (principal amounts, excluding discounts and debt issuance costs)
|
$
|
15,106
|
|
|
$
|
1,144
|
|
|
$
|
1,101
|
|
|
$
|
1,476
|
|
|
$
|
11,385
|
|
Long-term debt (interest payments)
|
9,829
|
|
|
592
|
|
|
1,115
|
|
|
1,059
|
|
|
7,063
|
|
|||||
Total
|
$
|
24,935
|
|
|
$
|
1,736
|
|
|
$
|
2,216
|
|
|
$
|
2,535
|
|
|
$
|
18,448
|
|
(In millions, except average price paid per share)
|
Total Number of Shares Purchased
1
|
|
|
Average Price Paid per Share
|
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
2
|
|
|
Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
2
|
|
||
April 30, 2016 - May 27, 2016
3, 4
|
8.7
|
|
|
$
|
78.53
|
|
|
8.7
|
|
|
$
|
1,666
|
|
May 28, 2016 - July 1, 2016
|
3.4
|
|
|
78.45
|
|
|
3.4
|
|
|
1,398
|
|
||
July 2, 2016 - July 29, 2016
|
2.7
|
|
|
81.36
|
|
|
2.7
|
|
|
1,177
|
|
||
As of July 29, 2016
|
14.8
|
|
|
$
|
79.03
|
|
|
14.8
|
|
|
$
|
1,177
|
|
1
|
During the
second
quarter of fiscal
2016
, the Company repurchased an aggregate of
14.8 million
shares of its common stock. The total number of shares repurchased includes an insignificant number of shares withheld from employees to satisfy either the exercise price of stock options or the statutory withholding tax liability upon the vesting of share-based awards.
|
2
|
On March 20, 2015, the Company’s Board of Directors authorized a $5.0 billion share repurchase program with no expiration, which was announced on the same day. As of
July 29, 2016
, the Company had
$1.2 billion
remaining available under the program. In fiscal 2016, the Company expects to repurchase shares totaling $3.5 billion through purchases made from time to time either in the open market, including through pre-set trading plans, or through private off market transactions in accordance with SEC regulations.
|
3
|
In February 2016, the Company entered into an Accelerated Share Repurchase (ASR) agreement with a third-party financial institution to repurchase $500 million of the Company’s common stock. Pursuant to the agreement, the Company paid $500 million to the financial institution and received an initial delivery of 6.2 million shares. In May 2016, the Company finalized the transaction and received an additional 0.6 million shares. The average price paid per share in settlement of the ASR agreement included in the table above was determined with reference to the volume-weighted average price of the Company’s common stock over the term of the ASR agreement. See Note
8
to the consolidated financial statements included herein for additional information regarding share repurchases.
|
4
|
In May 2016, the Company entered into an ASR agreement with a third-party financial institution to repurchase $500 million of the Company’s common stock. Pursuant to the agreement, the Company paid $500 million to the financial institution and received an initial delivery of 5.3 million shares. In August 2016, the Company finalized the transaction and received an additional
1.0 million
shares. The average price paid per share reflected in the table above was derived using the fair market value of the shares on the date the initial 5.3 million shares were delivered. See Note
8
to the consolidated financial statements included herein for additional information regarding share repurchases.
|
Exhibit
Number
|
|
|
|
Incorporated by Reference
|
||||||
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit(s)
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
Restated Charter of Lowe’s Companies, Inc.
|
|
10-Q
|
|
001-07898
|
|
3.1
|
|
September 1, 2009
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
Bylaws of Lowe’s Companies, Inc., as amended and restated May 27, 2016.
|
|
8-K
|
|
001-07898
|
|
3.1
|
|
May 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
12.1
|
|
Statement Re Computation of Ratio of Earnings to Fixed Charges.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.1
|
|
Deloitte & Touche LLP Letter Re Unaudited Interim Financial Information.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) / 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) / 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2
|
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
‡
|
|
Filed herewith.
|
|
|
|
|
|
|
|
|
†
|
|
Furnished herewith.
|
|
|
|
|
|
|
|
|
|
|
LOWE’S COMPANIES, INC.
|
|
|
(Registrant)
|
|
|
|
September 2, 2016
|
|
By: /s/ Matthew V. Hollifield
|
Date
|
|
Matthew V. Hollifield
Senior Vice President and Chief Accounting Officer |
1 Year Lowes Companies Chart |
1 Month Lowes Companies Chart |
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